The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Hi lucky let me please have one more crack at why RC grades will be potentially a lot higher than .33%Cu. from your post
>> Pleased with the 25@20! that's 1.65mt at .33 ?Add on ascot and we could have 2/2.5/3mt. ?Could be more ar RC if the grade is higher but I doubt it.?
Here’s a fact, The average grade of porphyry copper ore is about 0.4%Cu, with the ‘larger proportion’ of ore minerals being less than 2 percent of the total volume of the ore rock with progressively more ore the lower the grade.
You are still trying to determine the amount of in ground copper by guessing the average grade% When in fact it is the amount of economic recoverable copper within a defined resource that determines the average grade%. Not the other way round. As I have said before, there is substantially more copper in ground the lower the grades are reduced. This is why the low economic cut off of 0.15%Cu is key to this extra copper volume. And the grade factor (.44) is not a assay drill average but the percentage of recoverable copper within the resource.
Jeremy Reid clearly states in the Ascot discovery webinar right at the very end that they estimate 2mtCuEq will come from RC with a resource of about 450mt @ 0.44%Cu hopefully confirmed now with CB’s revaluation of a mine potential of 500mt (25yrs x20mtpa).
Have another listen from about 23mins to end with Colin stating 2mt and shortly after Jeremy Reid confirms the point by also saying once all the assays are put into the model it determines the amount of copper. Which of course then, the copper % within the resource is then calculated.
https://youtu.be/QJ8b--rhvRI
"I think *current* production at Fairbride was stated as 20kg per month by both Colin and Joel. That is increasing over time with full (commercial) production by Nov/Dec."
Lets say Dec before full production.
So that's 20kg a month increase from Sept to Dec (Cb said 100kg a month in full production).
100kg a month is about £400K to £450k FCF (EX all costs and taxes so clear profit)
So circa £80K to £90K clear profit a month now and £80K/£90K extra every month up to December.
Assuming linear progression
Should be over £500K a month clear profit by December from FB + alluvials + small HR plant
IMHO
Thanks Steve for that latest post ( and Andmillsy too for his post below ) High quality posters, both.
quick update from Empress just now on FB
https://youtu.be/CpHKwa0iAyg?t=480
There was a line of questioning about 3 year versus 5 year versus longer mine life at the AGM.
Positive comments about potential to expand from 3 years is supported by Empress statements in the Youtube clip from 8 mins for 1 min.
Thanks to all the people who attended and made notes, hopefully more news to come, in the not to distant future. GLA
I think *current* production at Fairbride was stated as 20kg per month by both Colin and Joel. That is increasing over time with full (commercial) production by Nov/Dec.
I'd like to add my thanks for AGM feedback too.. especially to andmillsy..
As previously stated, my main focus for Sept and Oct was going to be Fairbride 'Ard income :
Re andmillsy feedback from yesterday : ''Fairbride is progressing well and income should be received in Nov / Dec with commercial production.''
After previous CB steer I was hoping for Oct for first meaningful income .... I'm now beginning to think I should listen to Empress timeframe predictions only.. after all, CB's timeframe predictions have spoken for themselves over the years :-)
But, if not expected full commercial levels, even something semi decent in terms of Oct. Fairbride Income could still happen ..maybe/hopefully.. and that would be very useful in itself
For the updates from the AGM.
It sounds like Oct Nov are the money months, probably starting in Sept for the SP rise with FOM.
Copper price should have recovered to 8500-9500 by then.
Very happy with everything tbh.
Many thanks for the AGM updates.
Interesting article on copper prices
https://www.mining.com/two-charts-show-copper-price-drop-may-have-been-overdone/
Hi Andrew just one point worth a mention >>He said twice over the last 18 months that ore is just about to be put on the lorries and is being taken to be processed. <
They were test mining for some time running ore to plant when I believe (without checking) that some further met test work and drilling was done. With the last release mentioning operations will resume soon!
Sorry don’t have time to check facts at moment, I do agree with all your other points.
Agreed, thanks for the feedback.
Oct it is then..
F100
Great feedback from everyone that attended.
My only contribution would be......just because he said it to your face, doesn't mean his timescales will be correct this time.
Pleased with the 25@20! that's 1.65mt at .33
Add on ascot and we could have 2/2.5/3mt.
Could be more ar RC if the grade is higher but I doubt it.
Looking forward to the model though, whenever it may arrive.
Thanks for all the feed back from those that attended the meeting. Appreciated.
In the big picture, the news about Eureka is not that significant as most are here for Bushranger. But yet again it shows the CB is more than just “overly optimistic” with his comments. He said twice over the last 18 months that ore is just about to be put on the lorries and is being taken to be processed. That clearly was not the case and now we have gone from repeated talk of a potential IOCG to hopefully. maybe, getting some income out of this.
2 years ago he predicted $200K a month from Jan 2021 from Eureka
Will Eureka end up going the same way as Moz Gold and Kalengwa (spelling)? If it does, I guess it doesn’t really matter in the overall scheme of things.
Thank God for Fairbride. His one major income success. Which he doesn’t seem to want to promote or celebrate :)
If CB does announce yet another “great accusation project” and not keep focusing on completion of Bushranger sale, then I doubt the market will see that as a positive. Well not before Bushranger sale is completed.
If CB is talking about the model being completed in circa October, then I guess that means Jan next year is more likely? CB does seem to keep insisting the RC model is not as late as it is. He originally gave a timescale of May (June latest) and now its October. First he said it wasn’t late in an interview, now he says it will be only 2 months late! CB needs a new calendar :)
I still believe that there will be a sale of Bushranger and at a much higher price than current SP. But I am not as confident it will be anything like CB’s previous implications and it may not happen until mid 2023 now?
I hope he proves me wrong.
Thanks again to everyone who gave feeback and notes.
Thank you Steve and Ben too for your time and efforts.
That’s good to now have a better understanding of wether the agreement being in place is a potential deterrent. With the resource total for both RC and Ascot now in excess of 2mt (would hope) you could say it has played some part up until now, but then again it was inherited without the option for it to be not in place. But, It’s made it much more clear cut in terms of only needing to concentrate on the asset and not worrying about the share price without that perceived threat of any corporate actions going forward once we are free from its constraints if AA pass on their options.
The share price will take care of itself once modelling , income etc is released
Thanks Steve (and everyone else) for sharing your notes.
Thanks for this very comprehensive feedback Andy.
The couple of months for the model release is something Colin should go on record with. 2months on 2 months gets to be a long piece of string to follow.... and by the sounds of it they must have a good handle on how long the remaining model work will take.
Thanks again though..... the sun is out again.... at least in my head
I asked quite a few questions on the strategy. In principle it seems to be:
1) Announce RC decision to mine based on 500mt (ish) using a model with a copper price in the region of $8500. Total contained not specified but we can probably assume around 1.5mt. The intention seems to be to get the AA decision out of the way early. Colin expects copper price to reach 15,000, so (reading between the lines) it seems to me they want to announce this model while we are below 2mt and the copper price is low in order to get a 'no' from Anglo. I asked if getting Anglo out of the way could backfire as it removes the shield of that agreement and allows a lowball bid for the company. Colin stated that junior miners don't suffer hostile takeover attempts. The only example he could think of was SOLG and that was due to conflict within the company.
2) Phase 3 will follow the above (which is interesting as they assume there will be a phase 3) and will cover more definition on RC higher grade area to improve the IRR, further drilling at Ascot and NW of RC, which they now seem to think is actually open again. This will happen sequentially, not all at once.
3) Start talking to various majors who are more likely interested because they already have a presence in the area (Newcrest?). Again reading between the lines, it sounds like informal contacts may have already happened. Colin made it clear that when a deal happens, it can happen quickly.
Based on the above, the 2mt seems to be a moot point because it will become irrelevant once AA reject (or accept) the decision to mine trigger. This seems to be a coherent strategy with defined steps. It could be a relatively quick deal if Anglo trigger the buyback on the decision to mine, or maybe 6-12 months for a different buyer. Colin made it clear there would be no JV. Whether people will be happy with that strategy will depend on their time horizon and prior expectations, but given the current market cap I will probably add as funds become available.
Howezap, I think you've hit the nail on the head there. As I mentioned yesterday, Colin didn't seem to see deep drilling as a priority, even when I mentioned many are excited by the prospect of an IOCG. I doubt that's because he's not interested in it. It took over an hour to get onto Eureka after Manica and Bushranger chat and those are the company priorities. Also, others may correct me if I'm wrong but I believe he said we are a little "constrained" at Eureka. He also definitely said that defining an IOCG takes a lot of drilling and would take a long time. He was adamant there are IOCGs in Zambia but I don't get the impression it's a short term priority to find one at Eureka - the lack of update over the last 11 months seems to support this conclusion.
Was any clarity given on whether declaring a 2mt JORC would automatically trigger the buy-back offer or whether Xtract can effectively put it on hold until they have finished their exploration work and have their 'final' resource tally?
Thanks Andy
My theory on possibly why they might not want to undertake a drilling program at Eureka to test the deep sulphides in the short to mid term is maybe they don’t want to start with some exploratory holes without being able to commit to and back it up with the funding that it will take to enter into a more comprehensive exploration programme to prove it up if there is an IOCG deposit there. It makes sense in understanding from your note 10.
Drilling a deep deposit is a big commitment in time and man hours that would potentially swallow a lot of cash, as it’s not like drilling a larger porphyry deposit , there’s a lot more risk.
The eureka pit is still open ended to the north-west to extend and also at depth so there will be steady income eventually, which was the priority there.
I certainly wouldn’t rule out the deep drilling in the future from the evidence already returned from the mineralisation style and assays. So maybe if and when the company is in a more stable and healthy position…
Does sound positive overall and as I have suggested they are not likely to go into the full phase 3 drilling. Potentially just the shallow high grade at RC to improve the early high grade recovery. That’s good news.
Also once XTR announce 'decision to mine', AA have 30 days to make a decision on triggering the buyback.
Details of buy back
That was my only question and the answer appears to be 'the whole of EL5574'.
4. Details of buyback agreement eg whole of 5574 or RC only. If whole of licence then how will value be attributed to Ascot and Footrot.
Whole of EL5574.
In this case it should be only a matter of course to get the full 2 MT of contained copper out of RC and Ascot and at a far better grade than if the buy back was for Racecourse only.
Cheers
if there is a "Paul" in the group who sat in the front row and asked quite a lot of questions would you mind making yourself known ? I can also be contacted on twitter https://twitter.com/andmillsy if preferable
9. Need to improve comms and investor info eg Kalengwa still on website etc....
Agreed and will post recent pictures and videos from Manica. Colin gave a quick tour of the FB operation including gold pour to one or two of us after the meeting broke up from videos on his phone. Joel committed that once commercial production is reached this will be publicised to ensure greater awareness of what they have achieved in being a funded explorer.
10. Focus on what they already have and not go after new projects
This was definitely not a commitment they would make but they are aware of capacity within Xtract and they would appear to prefer a smaller production operation but no specifics were shared – watch this space.
5. If we declare 2MT then what happens ? Try and assess confidence about achieving 2MT and from just RC. What if we are at 1.9MT ? What are the steps and timelines to trigger decision to mine, how would funding issue be addressed?
Largely covered in (1). Decision to mine is alternative trigger and they are progressing this. Note decision to mine is a defined term in Australian mining. It means that there is an economic resource which could be mined doesn’t mean all funding etc. are in place. It is clear that to develop a mine of this scale would require a major.
6. XTR has several exploration options - what is priority ? Either Manica, Eureka, EL5574 or other Oz licences? How would income from Manica be allocated to exploration ?
7. Timescale and potential for revenue at Eureka ?
This was the least clear part of the meeting for me. As stated in the chairman stated the company is funded for next 12 months this was reinforced but it is reliant on income from Fairbride. It wasn’t at all clear though how funds will be allocated to the different targets. The Eureka discussion wasn’t clear and initially focussed on operations and not exploration but any plans for further drilling on the exploration side weren’t clearly explained. Anyone else at the meeting who can add to this.
8. Quarterly gold reports not fit for purpose and don't reconcile for last 2 years to annual reports. Need segregation of different hard rock agreements, closing gold stock and transparency on how operating costs at Fairbride are determined and reported.
Joel appeared receptive to segmentation of results to give better visibility of alluvials v hard rock v Fairbride. James and I offered to provide investor input to the proforma report. We won’t get closing stock oz as it is deemed a control risk to publish that data.
Fairbride is progressing well and income should be received in Nov / Dec with commercial production. Gold pouring needs further focus. Equipment is working well. Life is 3 years based on oxides but transition zone and sulphides, with enhancement to plant, can prolong this. There are many yet to be explored deposits and Colin mentioned specifically more potential at Dots Luck.
Likely net operating cash flow c$1000 / oz.
I was reassured by the controls they have in place to ensure the right outcome for Xtract e.g. physical presence in the gold room, appearing on top of definition of operating costs.